How to pick a health care plan
A lot of factors come into play when choosing the right insurance for your employees
By the Numbers
- 22 percent drop in hospitalizations
- 14 percent decrease in emergency room visits (approximately)
- 40 percent cut in the cost of surgery
United Healthcare cites studies showing that employees with consumer-driven health plans use their health care resources more judiciously, resulting in a:
Finding the right health care plan for your company requires a touch so deft, it almost rivals that of a surgeon.
Among the considerations: what can be a complex mix of workforce demographics, local laws and market forces, to say nothing of a health care industry in more flux and under greater pressure than ever before.
Adding even more confusion is the Supreme Court’s pending ruling on the fate of the Obama administration’s overhaul of the nation’s health care system, expected by late June.
It also takes a commitment to finding the best options for both employees and budgets, to say nothing of some hard-nosed research to sift through the tangle of plans, providers, brokers, options, rules, regulations, laws and pending legislation.
Traditional health care options — such as, health maintenance organizations, preferred provider groups and point of service plans — typically offer low deductibles, low co-payments and little or no out-of-pocket employee costs for network care. Such serve companies well when it comes to recruiting or retention purposes.
A second route is a consumer-driven health plan, which more or less encourages employees to take more responsibility for their own health care needs. Such a plan makes sense when the cost of health care is hampering growth, when employees must be called upon to shoulder more of the burden and access to higher quality care is desired. These types of consumer-driven plans offer short- and long-term savings, as well as flexible benefit designs and an extensive provider network. The options usually carry high deductibles, which help keep premiums low, and may be coupled with a Health Reimbursement Account or Health Savings Account to defray costs.
United Healthcare cites studies showing that employees with consumer-driven health plans use their health care resources more judiciously, resulting in a 22 percent drop in hospitalizations, as much as a 14 percent decrease in emergency room visits and a 40 percent cut in the cost of surgery.
“How do companies decide on a health care plan? First and foremost, as I always like to tell people, is selecting the right broker, which is always the best resource,” says Rachel Scales, vice president of sales and service for Aetna. “The broker’s responsibility is to help them work through answering all those questions, and in fact kind of anticipating what those questions are.”
“Think about a quality independent broker,” says John Blackerby, director of small group sales for Anthem Blue Cross Blue Shield of Nevada, in Las Vegas. “They shop the market for independent business owners. A good start is www.nahu.org, the website of a very recognized national association, the National Association of Health Underwriters. That’s a good start for a business owner.”
Frank Nolimal, employee benefits specialist for Assurance Ltd., says an independent insurance agent should be able to arrange for at least six to eight carriers to provide a quote for a business operator. On the flip side, Nolimal routinely advises companies against getting 10 agents to offer quotes, “because in the small group market, from two to 50 employees, they’re all going to get the same rates, with the same information.”
As Scales sees it, each group has to look at the demographics of the employees being insured. For instance, if a firm’s workforce is largely a younger, predominantly male population, then higher deductibles and higher out-of-pocket expenses might prove more appealing to the group since it would yield a lower premium.
“The premise is that if they are younger males, they are probably not going to use the benefits as somebody like I would,” Scales says.
Business operators should always ask questions about networks when considering options, she says. Aetna’s DocFind service is among resources available to provide information on networks.
“Members and prospective employers can go onto DocFind to take a look; to put in their ZIP codes and see how many doctors, specialists, hospitals are closely located to them,” Scales says.
Many choices are based, in good measure, on personal preference.
“We’re seeing a lot of narrow network concepts come up,” Scales says. “Specifically for Nevada, we have what’s called the Aetna Value Network, which is a narrow network HMO concept. That’s worked for a lot of people. Some people might say, ‘Hey, I need hundreds of doctors to access,’ and that’s what they’re comfortable with. Others may say, ‘Hey, the doctors who are in this narrow network really work for me, and I’m OK with having this type of narrow network plan. So it’s all based on personal preference.”
What and who
Blackerby says that, contrary to a widely held belief, health care is “a very regulated industry.”
“The point of that is that the rates — whether a person goes through an independent agent or buys directly through an insurance carrier — are going to be identical,” he says. “You’re paying for the value of having an independent broker not only research a market for you but also continue to service your company’s needs.”
For a small business, and especially for a start-up, most insurance carriers require that the employer pay a minimum contribution, Blackerby says. That’s typically 50 percent of the employee cost, he says, but only applies to employees and not on dependents. If the employee chooses to enroll dependents, it becomes his or her out-of-pocket cost. Beyond that, most carriers require a minimum of 75 percent participation among a company’s employees.
“In other words,” Blackerby explains, “if somebody has what’s called a valid waiver — they either have coverage through a spouse or an individual plan — they can waive off and not be thrown into that 75 percent formula.”
“It’s so important to understand who your employees are,” says Dave Allazetta, vice president of sales and marketing for United Healthcare of Nevada. “For instance, if your employees tend to be lower on the socioeconomic scale, first-dollar coverage is so important — something like an HMO, where you’re going to pay $10 to see a doctor and you don’t have to worry about a deductible. You know you’re going to pay $10 to get your kid immunized, let’s say, or whatever the checkup may be.”
Other questions that must be asked, he adds, include: “Do you have a lot of families included? Have you got a lot of young bucks, who are invincible, and they could care less about going to a doctor? That’s going to dictate to a certain extent what type of plan you need. Can you get away with one that has a higher deductible with some preventive care in there? Or do people need access to a doctor and can’t really weather a large deductible, which would probably lean somebody towards an HMO.”
A corollary, Allazetta says, is access to medical care — especially care outside of the community. “You might have people who have kids in college. You might have people who visit their parents outside of, say, Las Vegas — they’re going to Reno, to California, Arizona, Utah, and you don’t want to put them in a plan that’s going to cost them an arm and a leg to see a doctor.”
What mistakes do companies make in selecting?
Problems can arise when companies fail to do their due diligence, which is critical since each carrier covers the landscape differently. Some differences matter a lot. An employee, for instance, might be in the middle of some type of high-level surgery or complex procedure only to find that one carrier is covering it one way while the other carrier might cover it differently.
Other situations can involve the doctors themselves. That same employee could be in the middle of receiving high-level services from one provider and find his or her doctor is not participating in the new plan. The employee would then have to scramble to another doctor, Scales says, “and sometimes that requires some working backwards.”
Carriers, brokers, rules and regulations are, of course, important. But companies are ultimately comprised of people — and those people and their myriad wants and needs will always be the single most crucial factor for any company to consider when choosing a health care plan.
“Business owners need to ask questions,” Blackerby says. “They need to ask a lot of questions.”